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The Renewable Fuel Standard is broken beyond repair

The Renewable Fuel Standard is broken beyond repair
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The EPA recently served up its annual reminder of an energy policy we would be thankful to see chucked out with the spoiled leftovers.

The Nov. 30 release of the 2018 biofuels quotas under the federal Renewable Fuel Standard (RFS) provides an opportunity to examine the mandate’s failures.

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The RFS entered our political discourse during the George W. Bush presidency. American petroleum production was in decline, gas prices were climbing and Al GoreAlbert (Al) Arnold GoreJoe Lieberman: We’re well beyond partisanship, our national government has lost civility Trump doesn't start a trade war, just fires a warning shot across the bow Dems face hard choice for State of the Union response MORE was clogging the airwaves to promote his film, “An Inconvenient Truth.”

 

First introduced by the Energy Policy Act of 2005 and later entrenched by the Energy Independence and Security Act of 2007, the RFS mandated that by 2022 36 billion gallons of biofuel be produced nationwide and imposed upon fuel refiners a minimum required volume of biofuel — mostly corn ethanol — to be blended into their products. This maze of regulations and directives was crafted with the nominal purposes of disentangling our economy from the volatile Middle East petrostates and weaning us off of greenhouse gas-emitting fuels.

Now, 10 years later our dependence on foreign oil has been thoroughly mitigated — but the RFS doesn’t deserve the credit. Compelled by the high gas prices of the 2000s, American energy producers deployed techniques like hydraulic fracturing and directional drilling to tap enormous stores of oil and natural gas in states as diverse as Pennsylvania, Texas and North Dakota. Prices plummeted and the global market has been so upended that the Energy Information Agency (EIA) projects America will soon be a net energy exporter.

Advocacy for biofuel mandates has persisted despite the sea change in global energy production. The fallback argument is that biofuel is a smarter environmental choice than traditional gasoline because upon burning it emits a lesser volume of greenhouse gases. But even if we grant that an emissions reduction is a laudable goal, this argument doesn’t pass muster. According to the Congressional Budget Office, “available evidence suggests that replacing gasoline with corn ethanol has only limited potential for reducing emissions (and some studies indicate that it could increase emissions).”

Though greenhouse gas emissions from ethanol itself are indeed lower than those from gasoline, that doesn’t tell the whole story. What’s missing is an account of the environmental costs of ethanol’s production.

According to the Intergovernmental Panel on Climate Change (IPCC), “(S)ince for some biofuels, indirect emissions — including from land use change — can lead to greater total emissions than when using petroleum products, policy support needs to be considered on a case by case basis.” As the IPCC suggests, ethanol isn’t an obvious emissions winner. Even the Sierra Club has called the biofuel mandate “unsustainable,” describing it as “unconscionable that the EPA continues to turn a blind eye to this burgeoning environmental crisis.”

With both the energy independence and emissions arguments proven untenable, what motivation remains for RFS advocates?

By pulling back the husk, we see that the RFS’s staunchest supporters tend to hail from corn-producing states like Nebraska and Iowa. Corn growers in America’s heartland have much to gain from the increased demand that the RFS creates. The rest of us, on the other hand, hardly give it a second thought. Ethanol’s enduring presence on our energy landscape is a classic example of concentrated benefits and dispersed costs. But across the country the RFS burdens each of us in subtle ways.

One example is through taxpayer-funded grants for ethanol infrastructure. Ethanol’s corrosiveness whittles away at gasoline holding tanks and, to cushion the fuel suppliers who would otherwise bear the cost, the Department of Energy doles out cash to upgrade their equipment.

Another unseen burden is that ethanol is a less efficient fuel than traditional gasoline, meaning we can’t make it as far per gallon. According to the EIA, “In general, vehicle fuel economy may decrease by about 3 percent when using E10 relative to gasoline that does not contain fuel ethanol.” This inefficiency means we have to fill up more often and, ultimately, spend more at the pump. 

Despite the clear drawbacks of the RFS, the deep-pocketed corn ethanol lobby continues to influence policy in Washington, as the recent EPA announcement shows. Government incursions into energy markets often yield nonsensical results, and the RFS is a prime example. This mandate is costly, unnecessary and corrupt. After more than a decade of RFS distortion, it’s time for us to finally say “no thanks.”

Jordan McGillis is a policy analyst at the Institute for Energy Research, a nonprofit focused on free-market energy and environmental research and policy.